$7500 First Time Home Buyers Tax Credit Explained

The Housing Bill (H.R. 3221) signed into law by President Bush in July offers first time home buyers a tax credit equal to 10% of the cost of their home up to $7500. This tax credit is available to first time home buyers who purchase a home in the United States as their principal residence on or after April 9, 2008 and before July 1, 2009.

To qualify as a first time home buyer, the buyer cannot have owned an interest in a principal residence in the past three years from the date of the qualifying purchase.

To qualify for the full amount of the tax credit the buyer must earn no more than $75,000 if filing as Single or Head of Household. If filing a Joint return, the buyers may have income of no more than $150,000. There is a phase out of the credit if reported income is more than $75,000. Consult with a tax advisor to see how much of the tax credit your buyer could qualify to receive.

The tax credit allows the buyer to deduct the credit from the total tax liability for the year in which the credit is taken. So, if the total tax liability is $8,000 for 2008 and the buyer qualify’s for the full $7500 first time home buyers tax credit, deduct the $7500 from the tax bill and the buyer only pays $500. Also, the tax credit is "refundable". This means that if the total tax liability for 2008 is $4000 and the buyer qualify’s for the full $7500 first time home buyers tax credit, the credit would be used to pay the $4000 tax bill and the buyer would receive a tax refund check from the IRS for the $3500 difference. Consult with a tax advisor to see how the tax credit would impact the buyer’s tax return.

This tax credit must be repaid. However, the repayment period is 15 years unless the home is resold before the end of that period and there is no interest on the amount of the credit that is received. Repayment of the credit begins two years after the credit is claimed and is repaid in increments of 6.67% per year of the credit amount. Consult with a tax advisor to learn how the tax credit repayment plan works.

Essentially, the tax credit is a 15 year interest free loan from the government. Since money today is worth more than an equal amount of money in the future, the tax credit it is a fantastic opportunity that a buyer can’t afford to miss. Any money used to pay a tax bill and any refundable portion of the tax credit that is received can be invested to earn interest. Any interest earned is kept by the borrower after the principal has been repaid. Consult with a tax advisor or financial planner to understand how the tax credit can earn money.

Calhoun County Tax Records

It will be at least another month before the Birmingham MLS integrates the Calhoun County Tax records into the MLS. In the meantime you can look up individual tax records at: http://gis.calhouncounty.org/

Introduction To Calhoun County Real Estate

This is my first post to this blog. My intent for this blog is to discuss the real estate market in Calhoun County Alabama. I will not limit myself to only the real estate market but to many other items that would be of interest to people living in this part of the state.